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Recently cerium compounds have been used as diesel fuel additives to increase fuel combustion efficiency and decrease diesel soot emissions. However, detection of cerium oxide nanoparticles (CeO2) in the diesel exhaust by emission tests are a cause of health concern. Our previous studies have shown that exposure of rats to CeO2 induces sustained pulmonary inflammation and mediator production, and lung fibrosis. The current objective is to evaluate the effects of CeO2 on functional change of alveolar type II cells (ATII) leading to EMT. Male Sprague Dawley rats were exposed to CeO2 (3.5 mg/kg) by a single intratracheal instillation and sacrificed at various times post exposure. ATII were isolated from lung tissues at 28 days post exposure and purified by panning. Alveolar macrophages (AM) were isolated by bronchoalveolar lavage (BAL). The first BAL fluid (BALF) and AM-conditioned medium obtained after a 24 h incubation time were saved for further analysis. Lung fibrosis was evident by increased hydroxyproline content and enhanced Sirius Red staining for collagen in lungs at 28 days after CeO2 exposure. Scanning electron micrographs indicate CeO2-induced ATII hypertrophy. Confocal microscopic analysis demonstrated that exposure to CeO2 increased the presence of stress actin, expressed as á-smooth muscle actin (á-SMA) in ATII at 28 days post exposure and caused CeO2-induced EMT. CeO2 exposure significantly increased the fibrogenic cytokine,TGF-â1, in AM-conditioned media, and increased matrix metalloproteinases and soluble collagen in BALF, at 3 and 28 days post exposure, respectively. In vitro exposure of ATII or a rat type II cell line (RLE-6TN) to TGF-â1 significantly increased á-SMA expression and altered morphology. In addition, exposure of type II cells to BALF significantly increased á-SMA expression, suggesting CeO2 exposure induced mediators in the BALF significantly modified cell function. These results demonstrate that CeO2-induced EMT of ATII may play important role in lung fibrosis. These findings suggest potential health effects of CeO2 exposure.